The parking hasn't been the only show-stopper on Ladder 12. The other issue has been the purchase price. The City told us that it is bound by the City Charter to sell Ladder 12 for an amount set by an independent appraisal and approved by the City's Appraisal Review Board. For Ladder 12, the purchase price was set at about double what our SPX project could afford. Initially, we agreed to pay the full asking price because we did not want to immediately begin what we knew would be a protracted (and expensive) process to reduce it. Then, as we worked and re-worked our development numbers, we realized that we simply could not underwrite the full asking price. We then made a counteroffer for about half the asking price, but the City, citing the Charter, indicated that we would need to provide an independent appraisal supporting our reduced offer. We decided not to seek another appraisal for two reasons. First, a firehouse just sold around the corner for more than the Ladder 12 asking price, which presented a troublesome comp. Second, and more importantly, our position was not that Ladder 12's appraised value was necessarily too high, rather it was that our project could not afford that price. These small historic rehabs are all about entry cost and feasibility. The high cost of rehab leaves little wiggle room for cushy purchase prices. In a deal in which we and our partners already were investing nearly 50% equity, another chunk of cash would not have been an investment, it would have been charity.
So, we are moving on to other sites for the SPX. If you have any good leads, please let us know. In the meantime, please join us in wishing the City the best of luck with Ladder 12. She's a great building.